Apple TV vs. Amazon Fire TV: Cost Comparison

Can the two-year-old Apple TV product still compete with the 2014 Amazon Fire TV? Teardown.com prices it out.

Can the two-year-old Apple TV product still compete with the 2014 Amazon Fire TV? At Teardown.com, we priced it chip by chip in detail. Here's what we found out. Note that the costs are those at the time of their respective teardowns, and that in the two years since Apple released its TV, the bill of materials (BOM) for that unit is likely to have dropped.

The Apple TV (third-generation) model A1427 was released in March 2012, and a month later, the teardown team at TechInsights took one apart and estimated its BOM. At the time, we estimated the BOM at $70.30.

Roughly two years later, in April 2014, Amazon released its Fire TV, which TechInsights' Teardown.com team tore down in May 2014 with a cost estimate landing at $92.99.

Amazon Fire TV box and remote.(Source: Amazon)

Apple TV third-generation model A1427.

Both units have a retail price of $99. From a cost-at-launch standpoint, as shown in the chart below, Apple appears to be making a better profit at nearly $30, compared to Amazon at $6. This ignores the channel margin, which is likely ~20%. An advantage of Amazon is that it sells the lion's share of its product, so it limits payments of additional reseller margins. But make no mistake -- neither company is looking for unit profits. Both are seeking to continually unleash the profits of streaming media services to the growing number of connected consoles worldwide.

It is not surprising to find that, being a 2014 product, the Fire TV comes with a faster processor, more SDRAM memory, MIMO dual-band WiFi, 5.1 surround sound, and a Bluetooth driven remote for non-line-of-sight control. The device also comes with a very interesting new IC from SiTime. (More about that company in a coming blog.)

Skibum, surely, all it takes is something the size of a Raspberry Pi, with an IP stack and perhaps a choice of browsers, to do these Internet TV boxes right. In my case, I use a PC more or less as a result of aggravation that the CE vendors couldn't do it right on their own, and the PC sits on an equipment shelf just like a tuner or amp would.

The appearance of collusion between the established TV service providers and the makers of these limited-use TV boxes is impossible for me to ignore. People who have these boxes, and therefore think that "all they need" is Hulu Plus and Netflix, simply don;t know what they're missing. And worse, these boxes tend to discourage new TV portals from being created, because there would be no way for Internet TV viewers to find them.

Looking at the specification and the hardware of both the devices it true that even if Apple TV can play almost all the video formats available today but the hardware used in Fire TV is far more superior as compared to Apple TV that mean it will be able to get many more new updates, but at the same time it is the constant updating OS that can make used of the extraordinary hardware without that it is of no use. Apple is known for its updates let's see how far Fire TV goes.

I haven't seen a PC that fits in the same form factor as Apple TV, or that I can control from my phone or tablet. Like most consumers, my interest in OTT content is primarily Netflix & YouTube, maybe someday HuluPlus. Ease of use and offering most of what the majority wants to watch seems to be winning out over the DIY connect-your-PC-to-your-TV crowd.

Bert, it's about ease of use, security, and expectation. Viewers are used to having a restricted set of channels they can watch, so they don't feel deprived by the limitations of these streaming boxes. The box is easy to operate. You don't need to know URLs or the like, nor do you need to search for sources. Just turn it on and select the channel and show you want. It stays connected to your TV and only costs $100 or less, neither of which is true for a PC. And no one worries about surfing to the wrong site and getting a virus or anything.

That said, developers are finding that they need to offer more and more channels to remain competitive. And they do. My Apple TV came with about a dozen channels to start, and Apple has added a dozen more since my purchase.

Doesn't have to be in the future. I discontinued my tv services years ago when I got the Apple TV. My Internet is DSL on my phone landline, so no cable company required. I must say I don't miss having 100+ channels, most of which were shopping, evangelical, or in languages I don't understand. At least with the Apple TV I can hide those channels I don't use so they don't clutter up my navigation screen.

I think the cable companies are increasingly hard pressed to retain their television customers, which is part of why they want to control the traffic on their Internet offerings to restrict things to their services.

HP and Dell make PCs that can run rings around these limited-by-design boxes, such as AppleTV, Roku, and the new Amazon box.

The reason these Internet TV boxes are cheap is, no doubt, that they only allow access to a handful of pay-TV Internet sites. It's almost like buying a PC that only gives you access to Amazon, iTunes, and a couple of other Internet stores. No one would buy such a box, knowing how much is available on the Internet, and knowing that new sites are created on a daily basis. And yet, for some reason, when it comes to TV over the Internet, this odd behavior is accepted.

Given the design aspects of each - we've also torn down STBs - you can expect these technology to merge at some point. The more interesting aspect will be the conflice between the cable/telco/traditional media and the Apple, Google, and Amazon's of the world. IF STBs are replaced by these devices, can the before mentioned tech firms bypass the carriers (e.g. Google Fibe)? Another questions, is where does this leave HP nad DELL? Are they further relegated to obscurity?